FI Morning Grain Comments 03/13/23

PDF attached

 

Good
morning.

 

Lower
ag overnight trade before a rebound in grain prices at the start of the day session. Black Sea grain export deal talks started today in Geneva between U.N. officials and Russian Deputy Foreign Minister Sergei Vershinin. The current deal is expected to expire
this Saturday. We look for it to be extended. US equity markets are sharply lower, crude oil down a large $2.62 and USD was off 73 points. President Biden is expected to address Americans over the bank failure this morning.

 

Volatile
outside markets are expected to keep grain prices choppy. With more than half of the Brazil crop collected, and good SA weather outlook for this week, look for additional SA producer selling. Malaysia May palm futures were down 50 ringgit to 4,043 and May
cash was down $2.50 at $950.00/ton. Offshore values were leading SBO higher by about 204 points this morning and meal $0.80 short ton higher. CFTC COT showed soybean meal net longs hit a record as of Feb 21.

 

 

 

Weather

South
American weather does offer some light rains for dry Argentina. Brazilian Soy harvest might slow as rains increase Safrinha corn areas. Northern areas will see a pickup in harvest, where the corn crop for the second season is mostly planted. Ongoing rains
hammering the west coast will spread east this week providing additional wintery storms for the upper US. TX and OK have a chance for rain bias eastern areas, much needed where its topsoil remains dry.

 

 

WORLD
WEATHER HIGHLIGHTS FOR MARCH 13, 2023

• Eastern
  China is drying down especially in the Yellow River Basin and North China Plain and this process will continue
• Temperatures
  peaked in the 80s Fahrenheit in this region during the weekend
• China’s
  rapeseed areas will get routinely occurring rainfall over the next two weeks supporting long term crop development
• India
  will see rain in central and eastern parts of the nation later this week into next week, but the moisture will come too late in the season to seriously change winter crops
• Some
  rice and sugarcane will benefit, though, wheat quality concerns may rise, but most of the rain in that region will be too light to seriously impact the crop
• North
  Africa will be dry for another week and then some rain is likely in northeastern Algeria and northern Tunisia
• Europe
  topsoil moisture has increased following the recent boost in rainfall across the north
• Dryness
  remains in eastern Spain and the lower Danube River Basin with little change likely
• Temperatures
  reached the 70s and lower 80s Fahrenheit in eastern Spain during the weekend
• Stormy
  weather will continue in northern Europe and the western CIS in the coming week
• Argentina
  will see some rain beginning to fall in the drier areas later this week and again next week, although the improvement will come slowly and mostly too late for a dramatic change to production potential
• Brazil’s
  greatest rain will shift to center west crop areas in the coming ten days, although some showers will continue with less frequency and intensity in center west and northeastern crop areas
• U.S.
  hard red winter wheat areas, West and South Texas will have opportunity for “some” precipitation in the next ten days, but drought busting moisture is unlikely
• California’s
  stormy weather will continue to come and go over the next ten days
• Recent
  snow in southern Canada’s Prairies and the northern U.S. Plains and northern Midwest will increase topsoil moisture when it melts – another storm is possible in the upper Midwest late this week, though confidence is low
• U.S.
  Midwest, northern Delta and Tennessee River Basin will remain plenty wet over the next ten days while the lower Midwest only sees light amounts of moisture

Source:
World Weather, INC.

 

Bloomberg
Ag calendar

Monday,
March 13:

• USDA
  export inspections – corn, soybeans, wheat, 11am
• New
  Zealand food prices

Tuesday,
March 14:

• EU
  weekly grain, oilseed import and export data

Wednesday,
March 15:

• EIA
  weekly US ethanol inventories, production, 10:30am
• FranceAgriMer
  monthly grains balance sheet
• Malaysia’s
  March 1-15 palm oil export data
• Eurasian
  agri-commodities conference, Kazakhstan, day 1
• Grain
  Export Conference, Paris

Thursday,
March 16:

• IGC
  grains market report
• USDA
  weekly net-export sales for corn, soybeans, wheat, cotton, pork and beef, 8:30am
• Eurasian
  agri- commodities conference, Kazakhstan, day 2
• Port
  of Rouen data on French grain exports

Friday,
March 17:

• ICE
  Futures Europe weekly commitments of traders report
• CFTC
  commitments of traders weekly report on positions for various US futures and options, 3:30pm
• FranceAgriMer’s
  weekly crop conditions reports
• USDA
  cattle on feed

Source:
Bloomberg and FI

 

 

 

CFTC
Commitment of Traders as of February 21

Traditional
funds for soybean meal took out their respected net long positions for futures only and futures and options combined, and managed money futures & options combined. Traditional funds rose above previous net records set back on 5/1/2018. For managed money, the
recent net long was recent.

 

 

 

 

 

 

 

 

Macros

 

Corn

·        
Corn futures
turned mixed after US wheat futures saw a large rebound from sharply lower prices at the end of the overnight session.  Outside markets are expected to keep US ag markets volatile. WTI crude oil is sharply lower and US equities are lower.

·        
Many US time zones “sprung forward” over the weekend. Europe will adjust March 26.

·        
News for the corn market is light.

·        
Look for additional precipitation for the upper Midwest to boost soil moisture head of planting season.

 

Export
developments.

• None
  reported

 

Soybeans

·        
Soybeans, meal and soybean oil are all lower from outside related markets and US economic uncertainty. Outside the US, fundamentals have not changed. SA weather improves this week, and we look for additional South American soybean
producer selling this week. Not all areas for Brazil will see ideal weather. Some of the central crop areas may see a slowdown in fieldwork progress due to daily rain showers. Palm oil futures are near a one-month low.

·        
China plans to roll out additional policies to support grain production. They are already encouraging oilseed planted area expansion at the expense to grains.

·        
AgRural reported 53 percent of the Brazil soybean crop collected as of last week, 10 points above the previous week and below 64 percent below last year. Safras and Mercado reported Brazil soybean harvest progress at 48.9% versus
60.5% year ago. Patria Agronegocios reported 52.9% versus 64.3% last year.

·        
SGS reported palm oil exports from Malaysia for the March 1-10 period rose 50.8 percent to 487,000 tons from 323,280 tons for the same period month earlier.
AmSpec
reported Malaysia March 1-10 palm oil exports at 474,830 tons, a 52 percent increase from 312,092 tons reported during the same period in February.  ITS reported a 45.3% increase to 501,514 tons from 345,080 tons prior period.

·        
Malaysia May palm futures were down 50 ringgit to 4,043 and May cash was down $2.50 at $950.00/ton. 

• (Reuters)
  – Indonesia plans to set its crude palm oil reference price at $911.41 per ton for March 16-31, up from $889.77 per ton in the first half of the month, Musdhalifah Machmud, an official at the Economics Coordinating Ministry said on Monday. The price would
  put Indonesia’s crude palm oil export tax at $74 per ton for the period, and levy at $95 per ton for March 16-31, unchanged from the current level. The decree officially stating the reference price has not yet been published.
• China
  soybeans were up down 0.5%, meal down 0.7%, SBO down 1.2% and palm oil futures down 1.1%.

·        
Nearby Rotterdam vegetable oils were
5-10 euros lower from this time Friday morning and meal unchanged to 2.00 euros higher.

·        
Offshore values were leading SBO higher by about 204 points this morning and meal $0.80 short ton
higher.

·        
(Reuters) – India is likely to import 1.5 million tons of duty-free sunflower oil during the current fiscal year to March 31, trade and government sources said, half a million tons less than the quota allocated by the government.
India, the world’s biggest vegetable oil importer, buys sunflower oil from the Black Sea region, which accounts for 60% of the world’s sunflower oil output and 76% of exports. India has already imported 1.3 million tons of duty-free sunflower oil so far in
the 2022-23 fiscal year, and another 200,000 tons are expected by March 31, the sources said.

·        
Rosario Grains Exchange warned the Argentina drought could reduce the 2023 GDP by $19 billion from 2022 (they mentioned a 3 point decline). The government officially looks for only 2% in 2023. Grain export taxes could decline
$2.3 billion for the 2022-23 season.

 

Export
Developments

·        
None reported

 

Wheat

·        
US wheat futures fell during the electronic trade due to Black Sea grain export deal talks and lower outside markets, but rebounded post day session open on bottom picking. Weakness in the USD earlier limited losses.

·        
We think an agreement between the UN and Russia over the Black Sea export corridor deal will be reached this week ahead of the Saturday deadline (set to expire).

·        
This week the trade could see a decision reached for the Black Sea grain deal. Talks are underway in Geneva.

·        
China auctioned off 137,797 tons of wheat from state reserves at an average price of 2,793 yuan per ton, 97 percent of what was offered.

·        
Ukraine grain exports: 24 percent below previous season at 34.2 million tons

o    
19.9m tons of corn, down 2.1% y/y

o    
11.8m tons of wheat, down 35% y/y

o    
More than 2m tons of barley, down 62% y/y  (BB)

·        
Paris May wheat was higher by 2.00 euros earlier at 263.75 per ton, rebounding from a Friday 1-year low.

 

Export
Developments.

·        
Saudi Arabia bought 1.043 million tons of 12.5% protein wheat (480,000 tons sought) for July – August shipment, at an average price of $316.86/ton c&f.

·        
Algeria seeks additional wheat. At least 50,000 tons is sought for May shipment.

·        
Tunisia seeks 234,000 tons of soft milling wheat on March 14 for March 20-May 30 shipment.

·        
Jordan seeks up to 120,000 tons of milling wheat, optional origin, on March 14, for shipment during Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.

·        
Jordan seeks up to 120,000 tons of feed barley on March 15. Possible shipment combinations are for Aug. 1-15, Aug. 16-31, Sept. 1-15 and Sept. 16-30.

 

Rice/Other

·        
South Korea seeks 121,800 tons of rice, most of it from China, on March 21.